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France will foot the bill for vacation pay in distressed industries.
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To the list of generous support measures that France has rolled out to shield workers and businesses from the pandemic, add a new one: footing the bill for vacation pay.
The government said late Wednesday that it would pay for up to 10 days of vacation leave for every furloughed employee of restaurants, bars, hotels and sports centers that have been forced to remain closed and have lost business under France’s latest lockdown.
The pledge, which the Labor Ministry said would cost “several hundred million euros,” came after industry representatives complained that employers couldn’t afford to pay those benefits for lack of income.
The hospitality industry has been hammered by forced lockdowns and social distancing rules. While stores were recently allowed to reopen in France after a second national lockdown in October, restaurants and bars will stay closed through at least Jan. 20, prompting employers to keep workers sidelined on furlough schemes.
Under the taxpayer-funded government support plan, furloughed workers receive 84 percent of their net salary, subsidized by the state.
Yet even if employees aren’t working, they are still on their firms’ payroll, so vacation continues to accumulate. In France, salaried workers accrue 2.5 vacation days a month. According to the Union of Trade and Hospitality Industries, which represents the hotel and restaurant industry, 16 million days of paid leave haven’t been taken since March, representing an estimated cost to employers of 1.5 billion euros.
Faced with a potentially staggering bill, restaurants, hotels and gyms, many of which are barely staying afloat on a combination of cheap state-backed loans and payroll subsidies, pressed the government for additional financial relief for vacation pay.
After heated negotiations, in which the industry asked the government to pay for 15 days of vacation per employee, the Labor ministry agreed to foot the bill for 10 days. Employers will receive full compensation, meaning that workers will be paid 100 percent of their salary when exercising the vacation days.
Under the deal, restaurant, cafe, hotel, bar, gym and hotel employees must use those days between Jan. 1 and the expected Jan. 20 reopening. Businesses are eligible if they were closed for at least 140 days this year or if sales slumped more than 90 percent during national lockdowns.
Since the coronavirus hit, France has outlined over 400 billion euros in state-backed loans and direct subsidies to prevent a wave of bankruptcies and mass unemployment.
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